Egypt and the International Monetary Fund (IMF) are nearing completion of the first and second reviews of the country’s $3 billion loan program, with the possibility of a “mega-sized” increase in funding.
Speaking at the World Governments Summit in Dubai, Georgieva said the IMF and Egyptian authorities have made “significant progress” on a policy package for the program, aimed at economic reforms and addressing financing gaps. She revealed the anticipated funding boost will be substantial, but the exact amount awaits the conclusion of negotiations.
Egypt’s initial agreement with the IMF involved a $3bn loan, but only a first instalment of $350m was disbursed. Reviews scheduled for March and September 2023 never materialised due to a lack of progress on key reforms, prompting program suspension.
The IMF stipulated reforms including exchange rate flexibility and divestment program progress before further disbursements. The latter was stalled by valuation disputes amidst pound depreciation in the parallel market.
Despite the challenges, expectations now suggest a new loan ranging from $6bn to $10bn.
Georgieva met with Egyptian Prime Minister Mostafa Madbouli and other key officials, expressing significant progress in discussions on a comprehensive policy package.
Madbouly reiterated the government’s commitment to comprehensive economic reforms, including inflation reduction and debt-to-GDP ratio improvement, while emphasising support for the private sector.
He highlighted social protection programs like President Al-Sisi’s recent minimum wage and pension increases, along with the Decent Life initiative aimed at improving rural living standards. Madbouly also addressed the regional situation, citing the burden of hosting millions of non-Egyptians and Egypt’s efforts for a Palestinian ceasefire and peace solution.
Georgieva expressed an understanding of regional challenges like the Gaza conflict and Red Sea maritime security concerns. She pledged IMF support for Egypt’s economic reforms and social policies aimed at alleviating burdens on low-income citizens.
She advocated for project scheduling adjustments and advised against rushing state-owned company divestment under current circumstances. However, she stressed the need for addressing inflation and achieving a flexible Egyptian pound exchange rate to absorb shocks.
In a separate interview with Al Arabiya Business, Georgieva declared the multiple Egyptian pound exchange rates as “disastrous,” advocating for a unified rate determined by the official market.
The pound currently trades at around EGP 60 per dollar in the parallel market, with international depositary receipts indicating a rate of EGP 70, compared to the unchanged official rate of EGP 30.9.
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